Genome instability in the form of chromosome rearrangements is a hallmark of cancer cells and a driver of tumorigenesis. Mounting evidence indicates that an error-prone alternative form of double-strand break repair called microhomology-mediated end joining (MMEJ) promotes chromosome rearrangements associated with DNA deletions by utilizing sequence microhomology to recombine broken DNA. MMEJ is distinct from the classical non-homologous end joining (NHEJ) pathway since it functions in a Ku and Ligase IV independent manner and is therefore referred to as alternative end joining (alt-EJ). Although MMEJ appears to be the major form of alt-EJ, the central mechanism of this elusive pathway remains unknown. Genetic studies in C. elegans and Drosophila, however, suggest a central role for the atypical A-family DNA polymerase theta (Pol?). In preliminary studies, we demonstrate for the first time that the polymerase domain expressed by human POLQ - herein referred to as Pol?-performs MMEJ of DNA containing 3' single-strand DNA (ssDNA) overhangs with two or more base-pairs of homology, including DNA modeled after telomeres. We show that MMEJ is specific to Pol?, is facilitated by hydrogen bond formation between opposing overhangs, and is dependent on Pol? in vivo. Remarkably, we find that Pol? exhibits DNA end joining and microhomology annealing activities separately from its replication function. Yet, the polymerase utilizes the opposing overhang as a template in trans to stabilize the DNA synapse. We further find that Pol? preferentially performs MMEJ of DNA containing a 5'-terminal phosphate, which demonstrates a functional similarity to X-family polymerases involved in NHEJ. Additionally, we identify a conserved insertion loop domain in Pol? that is essential for MMEJ and higher-order structures of the polymerase which likely facilitate DNA tethering. Lastly, we present data suggesting that Pol? exhibits terminal transferase activity, which is thought to contribute to MMEJ. We propose to further characterize the biochemical mechanisms of Pol?and its involvement in MMEJ by developing the following specific aims: 1. To elucidate the mechanism of MMEJ promoted by Pol?; 2. To investigate and characterize terminal transferase activity of Pol?; 3. To characterize the activities of full-lenth Pol? . In summary, these studies will provide new insight into the activities of the atypical A-family DNA polymerase theta, in particular its role in MMEJ of double-strand breaks, and therefore significantly contribute to the DNA repair research community.